“I’m Embarrassed for Him”: A Requiem for Gary Cohn

“The president is one large S.T.D.,” one former Goldman partner says. “And if you’re in close proximity to him you’re going to be tainted.”

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By Andrew Harrer/Bloomberg/Getty Images.

Before he joined the White House as Donald Trump’s chief economic adviser, Gary Cohn hit a ceiling on Wall Street. After a rapid ascension from selling aluminum siding and window frames to dealing options at the New York Mercantile Exchange to the No. 2 spot at Goldman Sachs, Cohn stalled: even if longtime C.E.O. Lloyd Blankfein had decided to step down, which he never did, Cohn’s “brusque manner”—he was known as a blunt operator who would often “plant his foot on a trader’s desk, his thigh close to the employee’s face, and ask how markets were doing”—apparently didn’t endear him to the board. So when Trump, somewhat unexpectedly, came calling, Cohn quit Goldman for another path to power.

That gamble, perhaps predictably, backfired: Initially celebrated as the West Wing’s resident “adult in the room,” Cohn’s credibility was relentlessly eroded in a series of humiliating episodes. He abandoned his principles to defend Trump’s decision to withdraw from the Paris climate accord (“We want to be in the coal business,” the lifelong Democrat found himself telling reporters, days after he’d said that “coal doesn’t even make that much sense anymore”). He credited the president for stock market gains that had, as he well knew, been ongoing for years. In August, after agonizing over the president’s equivocal remarks about white supremacy, Cohn ultimately chose not to quit. Trump rewarded his loyalty by giving the Federal Reserve chair job to Jerome Powell.

Now, all that is left for Cohn is selling the president’s increasingly unpopular tax cut. But Cohn, who is many hundreds of millions of dollars richer than he was in his aluminum siding days, seems to be struggling to connect with the middle class workers that Republicans insist they are trying to help. In April, when Team Trump first unveiled its one-page, double-spaced, bullet-point outline for tax reform, Cohn staunchly defended the repeal of the estate tax, for instance, as a boon to struggling farmers. But in an interview Thursday morning with CNBC’s John Harwood, Cohn’s arguments broke down under the slightest prodding, revealing his transformation from straight-shooting pragmatist to Trump’s new Baghdad Bob:

Harwood: Why do estate tax at all? If you preserve step-up basis, that means many capital gains for your kids, for Donald Trump's kids,
will never be taxed.

Cohn: Let’s wait and see where the final plan comes out. On the estate tax, if you look at the couple of groups who are the biggest
advocates for repealing the estate tax, it really is the pass-through
business and it's the farmers.

Cohn: Gary Cohn doesn’t care about the estate tax, I can guarantee you. I can guarantee you.

Harwood: You’re the one who said only a moron pays the estate tax.

Cohn: I can guarantee you Gary Cohn doesn’t care about the estate tax.

Harwood: When you look at the actual number of real farms that pay the estate tax, it is tiny—in the dozens.

Cohn: Well, I think people have managed to keep themselves below the estate tax. This is the whole issue. Many people are smart enough
to know how to manage themselves out of the estate tax. So, if you
have a family farm that’s big enough that it’s going to hit the estate
tax, you start paying lawyers, consultants, and accountants to break
up your land, and break up your farm, and giving it to the kids when
the families would prefer to keep the farm intact, keep it whole, and
manage it as one big farm. We’re forcing people into irrational
behavior, when we’d like to keep them in rational behavior, and run
the farm as one big farm.

Harwood: Are you seriously saying with a straight face that getting rid of the estate tax is about farmers and not about very
wealthy families?

The performance was not well-received back on Wall Street. “I’m embarrassed for him,” one former Goldman Sachs partner told me. “To say that it’s about farmers, it’s just factually wrong. It’s no more about farmers than the moon landing. A year ago, you thought the president might be surrounded by people who would guide him to good policy. That’s not happening. The president is one large S.T.D., and if you’re in close proximity you’re going to get tainted by it.”

“Why did he double down on the farmer thing,” another banking industry veteran wondered in vain. “He should have run from the farmer thing!”

The rest of the interview is not much better. Cohn, who previously said the bill would not give the wealthy a tax cut, first tries to argue that if the wealthy do, somehow, wind up getting a break, that isn’t something he planned, but just something that happened by chance:

Harwood: You're not saying, as you did a few weeks ago, that the wealthy do not get a tax cut under your plan?

Cohn: No. I'm saying there's unique situations to everyone out there. Everyone has their own story. It's not our intention to give
the wealthy a tax cut.

Harwood: But they're getting one.

Cohn: I don't believe that we've set out to create a tax cut for the wealthy. If someone's getting a tax cut, I'm not upset that
they're getting a tax cut. I'm really not upset.

Sources I asked about the interview were stunned by how much credibility Cohn had burned on Trump’s behalf. “I just don’t think you can take seriously anything he says about anything,” former policy adviser Bruce Bartlett, who served in the Reagan administration, told me. “He’s basically a P.R. guy at this point. He’s there to sell his boss’s product. The product may be crap but he’s being paid to promote it.”

“The reason Gary left the firm is pretty obvious,” another former Goldman employee told me. “In a career that saw him avoid missteps, his involvement with the Trump administration is on track to erase his significant accomplishments. He’s in bed with somebody who is just appalling. It’s just so, so bad.”

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With Senate Republicans expected to unveil the outline for a sweeping tax rewrite on Thursday, a lucrative break for golf-course owners—including the president—remains firmly in place in the House version of the measure. The Obama administration estimated in 2014 that closing the controversial loophole would save more than $600 million over a decade. While Republicans are eliminating many write-offs, the House version of the bill allows golf-course owners to claim deductions for promising never to build on their links. The Trump Organization, which owns a dozen courses in the U.S., has taken advantage of the break in the past, using a law that’s supposed to help preserve open space.